Tuesday, November 30, 2010

When it comes to iPads and other tablets, the magazine industry seems to be making the same mistake it made with the rise of the Internet and of electronic editions. The erroneous thinking showed up in a recent promotion from the usually forward-thinking Idealliance for a session that was all about “delivering magazine editions to multiple digital devices in addition to print.”

Yep, magazine-industry executives seem to be looking at the iPad and saying, once again, “Cool technology. How can we put our magazine onto that?”

A more sensible question would be, “How can our brand be translated to this new medium?” or, more crassly, “Can we make money with this thing?”

The result of asking the wrong question is that magazine-industry apps are, for the most part, boring.

“Having spent much of the past week downloading (or sometimes struggling to download) book and magazine apps in the search for design gems, I've come to the glum conclusion that most were designed with little or no imagination,” Alice Rawsthorn of The New York Times wrote yesterday. “All the designers seem to have done is to have shunted the original printed products on to the screen.”

But there are at least two signs of hope that the industry can learn to translate its brands onto tablets: Cosmopolitan mined its extensive investigative reporting on the Kama Sutra to create its Sex Position of the Day app, and Guitar World showed how to do a logical brand extension with its new (and well received) Lick of the Day app.

(Mr. Tree wants to know why none of the women he dates are Cosmo readers. Answer: He needs to spend less time hanging around in bookstores and more time hanging around on street corners.)

For those of you wondering about the difference between the Cosmo and Guitar World apps, only the latter will show you how to use an instant flanger.

Well, come to think of it, maybe those naughty Cosmo editors have found a creative use for instant flangers as well.

Sunday, November 28, 2010

High costs that outweigh any postage discounts and poorly trained Postal Service employees are keeping most business mailers from using Full Service Intelligent Mail barcodes, an extensive study concludes.

Of the 290 business mailers surveyed by USPS’s Office of Inspector General, 58% said they did not use Full Service IMbs because of high start-up costs and software requirements. Only 23% of the surveyed mailers said they were using Full Service.

“The man hours that go into making a mailing Full Service compatible are not worth the postage discount,” said one large mail owner (more than 1 million pieces annually). Another estimated it would have to spend more than $100,000 on new print heads and software upgrades to be able to create Full Service mailings.

The OIG report, released a few days ago, recommended that the Postal Service consider new Full Service incentives “to offset program start-up costs.”

But money is not the only issue, and perhaps not even the biggest one, the report indicated. Mailers will find their mailing vendors – “mail service providers” in postalspeak – reluctant to handle full-service mailings because the Postal Service’s employees and information systems are so poorly prepared to handle them.

The OIG recommended that USPS provide more training to Business Mail Entry (BMEU) clerks and PostalOne! help desk employees. Management largely shrugged off that recommendation, but the OIG considers the issue so significant that it won’t consider the matter closed until it receives written confirmation that corrective action has been taken.

Full Service Intelligent Mail barcodes uniquely identify each mailpiece. IM barcodes are part of the Postal Service’s plan to track and manage mail volumes in an automated way, but Dead Tree Edition has nicknamed them “FUBAR codes” because of the program’s many problems.

The OIG report includes some instructive comments from mail service providers, including these:

“USPS employees know little or nothing about this service and this is frustrating mailers with the IMB Full Service.”

“Provide better BMEU training during initial mailings so the clerks and their managers know & understand the process (better than I do - I shouldn't be teaching them).”

“The PostalOne! help desk most of the time does not have a clue they don’t respond to e-mails all the time and the wait time on the phone is too long.”

“To make matters worse, even the USPS personnel (in Memphis) are confused as I've had to correct and educate them.”

Tuesday, November 23, 2010

On the way to creating its new color product that is supposed to make e-readers “Just Like Paper, Only Better,” E Ink forgot a few basic things. Like elementary school physics. And the color yellow.

As a result, the new Triton Imaging Film has a limited range of colors and a washed-out look that falls far short of four-color printing.

“The color is extremely desaturated even in their carefully presented marketing materials,” writes printing and color expert Gordon Pritchard. “The display's lack of color saturation may actually reveal the cause of the problem.” A friend of Dead Tree Edition who saw a prototype device confirms that the color is underwhelming.

Because they use reflected light (just like paper) rather than emitted light (like computer screens), E Ink’s products seem to be easy on the eyes and on battery life. That has made them a component of such popular products as the Kindle DX and the Barnes & Noble NOOK.

Here’s the design flaw: Triton uses the red-green-blue (RGB) color scheme that works for computer screens and other emitted-light devices but is ill suited to a reflected-light device.

If you remember your elementary school physics, red light, green light, and blue light can be combined to create just about any color. That works fine if you control the light sources.

But if you use reflected light, you need to filter those primary colors to create the desired hues. That’s why four-color printing relies on cyan (which filters out red light but allows green and blue to be reflected back to the eye), magenta (which blocks out green), and yellow (which filters out blue) – plus black.

“There is no RGB combination of ink hues that will deliver a yellow hue – and yellow is noticeably absent from the images so far shown for this display technology,” Pritchard adds.

If Triton mimicked the CMY (cyan-magenta-yellow) color scheme used by printers, he adds, it would have achieved similar results “in terms of color gamut and saturation. The color intensity would change according to the ambient light and be dependent on the ‘blackness’ and ‘whiteness’ of the underlying black and white screen pigments.”

Sunday, November 21, 2010

After starting up just seven Flats Sequencing System machines in the past six months, the U.S. Postal Service says it will have another 10 handling live mail by the end of this month.

USPS has greatly accelerated the pace of machine installations now that it has nailed down where the 100 machines in FSS Phase I will go and what ZIP codes they will handle. Besides the 18 that were already processing mail and the 10 being added this month, another 46 of the football field-sized monsters have been installed, according to a revised deployment schedule USPS released recently.

The Postal Service says it is still on pace to have all 100 machines up and running by June of next year. The latest plan is for those machines to sort catalogs, magazines, and other flat mail for 2,328 ZIP codes in 47 locations.

As noted in Is The FSS A Boondoggle?, the jury is still out on whether the $1.4 billion Phase I investment will be worthwhile and whether FSS will truly revolutionize the handling of flats mail. But the machines do seem to be reducing letter carriers’ in-office time, resulting in fewer carriers needed for areas served by FSS. And some of the machines have had idle days for lack of flat mail to process.

One aspect of FSS not likely to succeed is a recently implemented program that lets mailers package flat mail the way they will eventually be required to do for FSS zones. Following the optional preparation standards would result in more copies per bundle and in pallets configured optimally for the FSS machines, enabling USPS to test its theories about the best way to create bundles and pallets of mail for the machines.

But using the optional standards means loss of carrier-route discounts, which would be a significant penalty for most mailers. So it’s hard to see why they would go through the hassle and cost to participate in the experiment.

Monday, November 15, 2010

In taking the editorial reins at Newsweek, (AKA Beastweek), Tina Brown is treading ground already familiar to her husband: running a troubled newsweekly. But her publication is going in a decidedly different direction.

Sir Harold Evans was editorial director of U.S. News & World Report from 1997 to 2000, back when it was a weekly magazine battling against larger competitors Time and Newsweek. It subsequently went biweekly, then monthly, then announced this month it is shutting down its magazine altogether to focus on its more successful Web business and specialty print products.

Under Lady Evans -- er, Ms. Brown -- Newsweek's Internet content will soon be incorporated into the site of its new sibling, The Daily Beast.

So for those who used to see Jesus on the cover of both magazines around Easter time and wonder about the difference between the two, here's your answer: Newsweek is a magazine without a Web site, while U.S. News is a Web site without a magazine.

By government standards, the U.S. Postal Service's top executives, with their multimillion-dollar pension packages, are doing quite well. But their compensation is lagging further behind their counterparts in private industry, according to a USPS consultant.

"Towers Watson [a major management consulting firm] found that USPS executive base salaries are significantly below market when compared against published survey data of comparable jobs in the private sector," says the Postal Service's annual financial report, released today. "Moreover, the most recent assessment using 2010 data indicates that USPS executive salaries have continued to erode further over the past twelve months."

The same report says that Postmaster General Jack Potter, who is about to retire, ended fiscal year 2010 with pension benefits worth $4.4 million and received $798,418 in total compensation for the year. His successor, Deputy PMG Pat Donahoe, has pension benefits exceeding $3 million and received $481,088 in total compensation last year.

Two other postal executives also have pension packages worth more than $1 million. Because annual pay per person is capped at $276,840 annually, the Postal Service uses a variety of perks (such as spousal travel and employer-paid life insurance) and deferred incentive compensation to attract and retain top postal executives.

The annual report seems to lay to rest any ideas that Potter, who is only 55, is being forced to retire by the Postal Service's Board of Governors:

"Due to Mr. Potter's extraordinary leadership during the difficult and unprecedented economic challenges of 2010 and the results he achieved in implementing a number of process improvements that maintained service while lowering costs, his significant staff reductions, his development of a comprehensive plan to guide the Postal Service for the next decade, and his achievement of personal goals set by the Governors for the fiscal year, the Governors determined that it was appropriate to award the incentive compensation he is entitled to receive according to his contract."

Saturday, November 13, 2010

You can automate all your processes and follow every industry standard known to God and man, but that won't make your printed product immune to human error. Just ask the staff of Entertainment Weekly.

Print industry blogger Deborah Corn questioned recently whether the production team at the Time Inc. magazine was “asleep at the wheel” because of upside-down pages in a subscriber copy she recently received.

Here’s her description: "I received my EW (with Captain America on the cover) and saw that the back cover, an ad for an upcoming TV show on TBS, was upside down. My automated address was also upside down on the right side up cover. I looked carefully to see if perhaps it was some gimmick – like “this show will change your perspective” or if there was some reference to why it was placed this way – but there is none. I flipped over the mag, and saw that the back inside cover was also upside down, as were the last 2 text pages, also ads for this show."

As a Time Inc. publication, EW no doubt did everything in a sophisticated, leading-edge way. SWOP-compliant, PDFx/1a page files? Check. Ad file preflighted by Time and virtual-proofed at the printing plant? Check. Instructions to the printer generated automatically in a computer-readable format (instead of the usual spreadsheets and emails)? Check.

So what happened? It sounds to me as if this went wrong at the imposition stage – what PrintWiki defines as "the positioning of pages on a press sheet in such a manner that when the sheet is folded into a signature and cut, the pages will be in the correct sequence." In the U.S. magazine industry, imposition is almost always done by the printer, not the publisher.

How did it happen on both two cover pages and two body pages? This was probably a single eight-page signature. Saddle-stitched magazines often run mixed-stock cover signatures, where one web of the press prints four pages on cover stock that are assembled with four pages of lighter body stock from the other web.

And what about the upside-down address? That was no accident; it’s almost universal for mailed magazines in the U.S. these days. Postal regulations require flat mailpieces to have a right-side-up address in the upper right-hand corner when the bound edge is on the left. The back cover (where catalogs put the address) is prime advertising space, so most magazines meet the requirement by putting the address upside-down near the bottom of the front cover.

Why haven't more people reported seeing this? The big weeklies usually print in several different locations to meet tight newsstand delivery schedules, so this error only affected part of the country.

And I'm guessing not many copies had been produced before someone at the printing plant in question said, "Holy s#*t! Stop the cover press and fix these pages pronto!" But there might not have been time to redo all of the defective magazines.

And how did this mistake happen in the first place? An actual human apparently found a way to goof up an almost comply automated process. So much for the dream of a "lights-out" pressroom (although the error does make me wonder if the lights really were out).

Reminds me of the famous Warren Bennis prediction: "The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment."

The key language in the PRC's ratemaking rules states, "no rate shall take effect until 45 days after the Postal Service files a notice of rate adjustment specifying that rate." The period could be longer if someone challenges the proposed rates as being out of compliance with the price cap.

Some have also contacted me questioning how quickly the Postal Service's information systems could be updated with the new rates, given the recurring problems with PostalOne and other USPS systems. Good question.

Thursday, November 11, 2010

Because the Postal Service is seeking a ruling on how to calculate its rate cap, mailers will probably have to wait a few weeks before learning what rate increases are in store for next year.

USPS asked the Postal Regulatory Commission yesterday to determine “the amount of unused rate adjustment authority when rate adjustments are more than 12 months apart.” The issue is especially murky because the PRC’s rules for determining the inflation-based price cap on most postal rates (including First Class, Standard, and Periodicals) did not anticipate periods of deflation, as occurred in late 2008.

“If amendment to the Commission’s rules is necessary to give effect to the Commission’s determination, then the Postal Service asks that the Commission take such action,” the USPS petition said.

Assuming the Postal Service will await the PRC’s decision before issuing new rates for the “market-dominant” classes, the petition probably puts off any rate announcement for a couple of weeks – or longer if the PRC decides to hold a hearing or to entertain legal briefs. A rule change would probably require even more time.

The PRC has indicated it is sympathetic to the Postal Service’s financial plight, so it might expedite the decision. But it is also trying to complete an advisory ruling this month on the complex and contentious five-day delivery issue.

Informal guidance last month from the PRC’s chief lawyer said the rate cap could be calculated by comparing the recent monthly Consumer Price Indices to those from 2008 because most postal rates have not changed since then. But the Affordable Mail Alliance objected on both procedural grounds and also because that would unfairly ignore the fact that the average CPI in 2009 was lower than in 2008.

Rate increases that are within the CPI-based rate cap can be implemented in as little as 45 days (See the Nov. 12 update explaining the change from this article's original language), but USPS has usually given at least 90 days so that providers of presort software can rejigger their programs.

Tuesday, November 9, 2010

That's one of the differences between publishing companies and school systems that Cathie Black of Hearst Magazine will need to keep in mind as she makes the transition, announced today, from a career running newspaper and magazine companies to becoming chancellor of New York City Schools.

Here are eight more subtle distinctions between a publisher and a public school systems she'll need to keep in mind:

School systems are not-for-profit agencies by design. Newspapers are no-profit organizations despite all their efforts to be otherwise.

For schools, the largest inflow of funds is from state and local governments that always seem to be screwing them out of some money. For magazine publishers, the largest outflow of money is for postage, which also involves an indifferent bureaucracy that always seems to be screwing them out of money.

For a school system, a new student means more state and federal aid. For a publisher, a new subscriber means less net revenue (because the subscription agent charges more than the subscriber pays).

Schools have math classes that make kids feel like idiots as soon as they open a textbook and try to understand algebra. Magazine publishers have blow-in cards that make newsstand customers feel like idiots as soon as they open a copy and see they could have saved 90% by buying a subscription.

Public schools offer free education to all. Publishers charge some customers for their content, then give it away to others on their Web sites.

Schools are often judged by meaningless metrics, such as how their sports teams do and what proportion of the students take SATs. Publications have their own meaningless metrics, like awards and newsstand sales.

Schools are run by principals. Publications are run by advertising salesmen, who have no principles.

Sunday, November 7, 2010

Contrary to their popular image as despoilers of the forest, major paper companies get high marks for being green in a recent ranking of large U.S. companies.

All six forest-products companies in Newsweek's "Green Rankings 2010" scored in the top 35%. The magazine ranked the nation's 500 largest publicly traded companies on their environmental impact, "green policies", and reputation.

Leading the way was Kleenex maker Kimberly-Clark, ranked #76 based on a score of 80.65 out of a possible 100 despite a poor showing in the environmental impact category.

Greenpeace ended its Klearcut campaign against the company last year when it agreed to increase its usage of certified and recycled pulp. Kimberly Clark calls itself a consumer-products company, but with its purchase and processing of more than 3 million tons of pulp annually, it certainly fits into the forest-products industry.

IP made the biggest upward move from last year's inaugural ranking, jumping from #344, while Kimberly-Clark improved from #120. Domtar wasn't in last year's survey (probably because it was then classified as Canadian), while the other three slipped slightly in the rankings.

Other articles that challenge common conceptions about forestry and the forest-products industry include:

Thursday, November 4, 2010

Democratic Congress members who received significant financial backing from the forest products industry fared poorly in Tuesday’s elections, according to a published analysis.

The industry’s favorite candidate, Sen. Blanche Lincoln, D-AR, lost her re-election bid, as did three of the other eight Democrats who had received at least $20,000 in contributions from the industry as of Oct. 15, according to U.S. News & World Report. Another top recipient, Sen. Patty Murray, D-WA ($40,682), is clinging to a slim lead with votes still being counted.

The industry’s $1.89 million in donations slightly favored Democratic incumbents, with contributions averaging $5,611 per Democrat versus $5,394 for Republicans, according to U.S. News’ Congress Tracker web site, which is based on reports filed with the Federal Elections Commission. The site does not report on contributions to non-incumbents.

Lincoln’s haul of $149,750 from the industry was nearly three times greater than that of any other candidate, according to Congress Tracker, but her Republican challenger nevertheless trounced her. Other favorites of the forest-products industry who lost were Rep. Walt Minnick (D-ID, $38,350), Rep. Norman Dicks (D-WA, $24,717) and Rep. Travis Childers (D-MS, $20,000).

Not surprisingly, all of the Republican incumbents who received significant backing from the industry won re-election. Sen. Lisa Murkowski ($25,200), a former Republican waging an independent write-in campaign, seems likely to win, though that race has not been decided.

U.S. News notes that its data is based on “a compilation of contributions from the organization’s PACs . . ., employees, or immediate family members of employees” because the companies themselves generally don't contribute directly to campaigns. Of the industry’s top 25 recipients, five were from Washington, three from Oregon, and two each from Arkansas, Idaho, Mississippi, and Alabama – all of which have a significant industry presence.

The forest-products industry – which includes companies involved in timber, paper, pulp, and packaging – was not even among the top-50 industries donating to incumbents’ Congressional campaigns, according to Congress Tracker.

Wednesday, November 3, 2010

To understand how Congressional leaders exert influence over the supposedly independent U.S. Postal Service, consider the agency’s mail-processing centers in West Virginia.

As long as the late Sen. Robert C. Byrd, sometimes known as the Prince of Pork, ruled the Senate Finance Committee, the 11 mail-processing centers in his home state were safe. Though West Virginia had more such centers per capita than nearly any other state, the Postal Service’s efforts to consolidate its processing network somehow bypassed the Mountain State.

But all that has changed in the past five months, during which the Postal Service’s AMPS (Area Mail Processing Studies) program has hit the Mountain State with full force.

With Byrd on his deathbed, the Postal Service announced AMPS in June to consider shifting work from the Huntington and Beckley facilities to Charleston, WV. Just four days after Byrd died on June 28, USPS moved the processing of mail originating in ZIP codes beginning with 260 from Wheeling to Pittsburgh.

And last month, USPS announced another possible out-of-state shift – of mail processing from the Martinsburg Customer Service Mail Processing Center to the Suburban Maryland Processing and Distribution Center near Washington, DC.

Most, but not all, AMPS result in some form of consolidation – and, for some employees, a transfer on relatively short notice to another processing facility 100 or more miles away. The good news for Huntington workers is that Charleston is “only” 54 miles away; the bad news is that such proximity makes Huntington ripe for consolidation.

Because West Virginia’s mail is divided up among so many “Byrd droppings” – mail-processing facilities that each serve an unusually small number of customers -- mailers rarely dropship into the state. (USPS: Clean Up the Byrd Droppings! explores this in more depth.)

Consolidating more of the state’s handling of destinating mail into the Charleston P&DC could make it a more viable dropship location. That would save mailers and the Postal Service money and bring Charleston some work now performed by such out-of-state network distribution centers as Pittsburgh and Cincinnati.

USPS: Clean Up the Byrd Droppings! Many states with far more people and land area than West Virginia nevertheless have fewer mail-processing facilities. West Virginia's excess hurts both USPS and its customers.

Tuesday, November 2, 2010

Much to their amazement, U.S. pulp manufacturers are discovering that the Son of Black Liquor tax loophole is starting to pay off or will soon do so.

International Paper reversed its previous statements on the subject a few days ago, acknowledging that its gains could be "substantial" from the Cellulosic Biofuel Producer Credits program (commonly called Son of Black Liquor in conjunction with the pulp and paper industry). The country's largest pulp manufacturer scoffed early this year at the possibility of receiving any money from CBPC and said in July it did not foresee much benefit.

IP's most recent assessment was underscored by some of the first reports of 3rd Quarter earnings by smaller pulp makers. Temple-Inland, with less than one-fourth of IP’s pulp-making capacity, reported net gains of $83 million from Son of Black Liquor. Buckeye Technologies, with less than one-tenth of IP’s capacity, booked $51.3 million in after-tax profit from the program.

Those companies recorded Son of Black Liquor earnings and others are estimating 4th Quarter earnings because recent Internal Revenue Service guidance clarified how pulp makers can pay back Alternative Fuel Mixture (AFM) subsidies, the original black liquor tax credits, to cash in on the more lucrative Son of Black Liquor tax credits.

Both programs were established to encourage production of environmentally friendly fuels. But in the case of pulp mills, neither has what environmentalists call "additionality" -- that is, they had no favorable impact on the environment.

The federal government doled out, and is still doling out, billions of dollars to pulp and paper companies for doing in 2009 what they would have done anyway -- following the standard industry practice of burning black liquor, a pulp byproduct, to power their mills.

When CBPC started last year, pulp manufacturers did not bother to register for the program because the regulations indicated it was only for motor fuels and motor fuel additives. Even after the IRS issued a controversial ruling that made black liquor eligible for the program, industry analysts predicted that Congress would soon close the loophole.

But Congress went on its pre-election recess without taking up the issue or receiving a requested study of the loophole's impact. Meanwhile, pulp mills seem to be having no trouble getting IRS approval to participate in CBPC.

IP plans to carry forward at least some of Son of Black Liquor credits into future years, according to the company's CFO, Timothy Nicholls.

“If we see that there's a benefit there that we can realize, we'll try to time it, such that anything that we're giving back is timed close to when we would file an amended return and get the benefit from the cellulosic biofuel credit,” he said during the company’s recently quarterly earnings conference call.

“We're currently assessing where we are,” Nicholls said. "We can't quantify the potential benefit of the cellulosic tax credits at this time, but we think that, potentially, it could be significant.”

Temple-Inland didn’t have to repay any of its AFM credits to get the $83 million tax gain. It claimed Son of Black Liquor credits only on production from the 1st Quarter of 2009 when it was not participating in the AFM program. It has not indicated whether it would pay back any AFM money to receive additional Son of Black Liquor credits.

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